Argentina's Vaca Muerta Sur Oil Pipeline Notches Up Progress

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Written by Amir Richani for Industrial Info Resources (Sugar Land, Texas)--One of the most significant midstream projects in South America is progressing, with projected completion at the end of 2026. VMOS, the owner of the Vaca Muerta Sur oil pipeline, informed local newspaper Rio Negro that the 437-kilometer-long asset is 33% complete. The company expects the pipeline is projected to be operational by the end of 2026.

Construction on the Vaca Muerta Sur began in February of this year, as part of a broader effort to boost midstream capacity from the Vaca Muerta Formation. Vaca Muerta Oil Sur is expected to have an initial capacity of 180,000 barrels per day (BBL/d) of oil from Phase I and increase to 550,000 BBL/d in Phase II.

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The pipeline will connect Allen in Vaca Muerta with Punta Colorada on the Atlantic coast, where an export terminal will be built to ship Vaca Muerta's growing output. Based on current expectations, the midstream asset is expected to help Argentina boost exports by 380,000 BBL/d, with the possibility of adding two new pumping stations to increase the figure to 690,000 BBL/d.

Vaca Muerta Sur is one of the projects Argentina approved for its Incentive Regime for Large Investment (RIGI), the program launched by the current administration to promote the development of projects in exchange for fiscal and legal benefits.

In July, the project received a US$2 billion loan agreement to finance 70% of the project's development. The remaining 30% will be paid by the project's partners, which are YPF, Pluspetrol, Pan American Energy, Pampa Energía, Vista, Chevron Argentina, Shell Argentina and Tecpetrol.

This pipeline will help further ease Vaca Muerta's midstream bottlenecks, allowing the shale reservoir's prospects to develop even further. The exploitation of Vaca Muerta is enabling Argentina to achieve decades-long production records as shale output represents larger shares of the national volumes.

In August, Argentina produced 826,800 BBL/d of oil, 14.9% more than during the same month last year and the highest volume since January 1999. Of those, 64.1% came from unconventional production in Vaca Muerta.

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